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Latitude Group (Latitude) and hummgroup (Humm), formerly known as FlexiGroup, entered an agreement on Friday (18 February) that will see the non-bank acquire Humm Consumer Finance (HCF) for an aggregate consideration of $335 million.
Under this transaction, Latitude will gain the group’s buy now, pay later (BNPL), instalment and credit card operations.
The consideration includes 150 million Latitude shares, based on a share price of $2.00 per share, and $35 million cash. The total consideration is therefore $335 million.
The group has said it intends to distribute the entire HCF consideration to its shareholders, who will be asked to vote on the transaction and associated resolutions in near future (to be confirmed).
Upon completion, it is proposed that hummgroup chief executive Rebecca James will be invited by Latitude to lead the combined group’s BNPL business.
Latitude also intends to invite two Humm independent directors to join the Latitude board.
The transaction will enable Latitude to consolidate five receivables platforms into two, including consolidating Latitude’s BNPL business under Humm’s brand and SFQ2 Cloud Lending. Q2 Cloud Lending is the platform used by Latitude’s lending business, recently acquired through the purchase of Symple Loans.
Latitude’s managing director and CEO Ahmed Fahour commented: “The acquisition of Humm’s consumer business is a great outcome for both Latitude and Humm shareholders.
“The transaction will deliver significant synergies and shareholder value, cementing our position as the leading instalments and consumer lending business in Australia and New Zealand and accelerate our international expansion.
“Humm’s consumer business is a great fit for Latitude given Humm’s capability in big and small ticket BNPL and its merchant base, providing additional scale to Latitude at minimal marginal cost.”
Humm chairman Christine Christian AO added: “This is a transformational transaction for Humm group. The combination of Humm Consumer and Latitude will create a leading pure-play consumer finance business, a significant and profitable company able to compete at scale and build on Humm Consumer’s track record of building award winning products and experiences that customers love.
“This will create an even more compelling proposition for merchants, retailers and customers. The combined business will create significant value, both for Humm shareholders who receive Latitude shares and existing Latitude investors, and we look forward to working with Latitude to complete the transaction.”
Background to the deal
Latitude first flagged its interest in HCF earlier this year, with hummgroup confirming it had received a proposal from the non-bank in early January.
However, hummgroup has also stated in its announcement that it will continue to operate its commercial business, FlexiCommercial, supporting the group’s continued focus towards SME lending.
Indeed, last August, hummgroup announced it had plans to invest in and grow broker interactions through FlexiCommercial.
Group CEO Ms James said at the time: “Given the strong business momentum and favourable market conditions, the company has decided to invest and grow the FlexiCommerical broker channel, which has been a standout performer this year.”
Humm has also previously reported that broker strategy doubled its volumes year-on-year for the first quarter of the 2022 financial year.
This figure followed growth for FlexiCommercial in FY21, with 55.6 per cent growth in commercial and leasing volumes – growing to $540.3 million.
Further, cash net profit more than quadrupled, up 431 per cent to $22.3 million.
The deal also follows Latitude’s agreement to acquire the personal lending fintech, Symple Loans, for $200 million.
[Related: Latitude to acquire non-bank lender]